India says trade deficit 'ballooning'

A container ship is unloaded at the Mundra Port and Special Economic Zone (MPSEZL) at Mundra in 2011. India on Friday said its trade deficit was "ballooning" after imports sharply outpaced exports last month

India on Friday said its trade deficit was "ballooning" after imports sharply outpaced exports last month.

Imports accelerated by 21 percent to $40 billion in February from a year earlier, mainly driven by oil purchases, while merchandise exports grew by by a much slower 4.3 percent to $24.6 billion, hit by weak global markets.

"There is a large ballooning of the trade deficit," India's Commerce Secretary Rahul Khullar said in New Delhi.

The government raised its trade deficit forecast for the financial year to March 31 to $175 billion-$180 billion from $160 billion projected earlier. The trade gap totalled $104 billion last year.

Khullar told reporters that exports for the current fiscal year could undershoot the government's initial $300-billion target by a few billion dollars.

The bigger projected trade gap could also widen the current account deficit -- the total sum of trade and investment flows, analysts said.

Last month, the government forecast the trade gap would be 3.5 percent of gross domestic product, the worst performance in nearly in a decade.

The slowing export figures come on top of a raft of other disappointing Indian economic indicators.

Recent data showed that the economy expanded by an annual 6.1 percent in the final quarter of 2011, the slowest pace in three years.